It’s a war folks. A REAL war…

And to quote Lawrence of Arabia, “No prisoners!” Because there will be none.

The Christmas Day editorial in the New York Times lays out the battle ground and Al Qaeda isn’t one of the combatants. In fact, in this war Al Qaeda poses no threat. This time it’s face off between the folks who think government knows best and the peasants should pay for it and, of course, the peasants who pay.

It actually looks like The Times is having a “Come to Jesus” moment – appropriate for Christmas Day – with respect to spending by governments. The interesting part is that it’s not federal spending that is driving the train wreck, it’s the states. This is happening for a couple of reasons. First of all, many states have constitutional amendments that require a balanced budget. Secondly, states can’t print money, although I’d quibble about that one with their ability – and that of municipalities – to issue bonds. And those puppies are a who ‘nother story. Think mortgage/housing times ten. But we’ll save that for another day. The bottom line for today is that the states and cities have spent themselves into a big hole and The Times is calling for a bigger backhoe. Here are some lowlights from the article…

For most of this year, the state of Illinois has lacked the money to pay its bills. Some of its employees have been evicted from their offices for nonpayment of rent, social service groups have laid off hundreds of workers while waiting for checks, pharmacies have closed for lack of Medicaid payments. Faced with $4.5 billion in overdue payments…
[…]
Starved for revenue and accustomed to decades of overspending, many states have been overwhelmed. They are facing shortfalls of $140 billion next year. Even before the downturn, states jeopardized their futures by accumulating trillions in debt that they swept into some far-off future.

But that future is not so distant, and the crushing debt has made recovery far more difficult to achieve. As The Times reported, Illinois, California and several other states are at increasing risk of being the first states to default since the 1930s.
[…]
The most immediate cause of the states’ problems is the decline in tax revenue caused by the downturn, just as the demand for services has increased.
[…]
Many conservatives have said the revenue decline is a good incentive for states to cut their spending. That is precisely what almost all states have done, because they are legally barred from running deficits. State spending fell by 3.8 percent in the 2009 fiscal year and 7.3 percent more in the 2010 fiscal year, the only significant declines since at least the 1970s, even as the cost of education and health care rose.
[…]But cutting spending will not affect the heaviest burden: the accumulated debt that comes from passing off the biggest problems to future generations. States and cities have nearly $3 trillion in outstanding bonds, and more than $3.5 trillion in shortfalls to pensions. Promised health benefits alone are more than $500 billion.
[…]
states are going to have to acknowledge that more effective, targeted tax increases are inevitable, and can be achieved if they are structured properly. Governors also must explain to voters that they have cut spending. The nation’s richest taxpayers just got a windfall in the federal tax deal extorted from President Obama by Republican senators. States should not shy away from asking for more help from those most able to pay.
[…]
states are going to have to acknowledge that more effective, targeted tax increases are inevitable, and can be achieved if they are structured properly. Governors also must explain to voters that they have cut spending. The nation’s richest taxpayers just got a windfall in the federal tax deal extorted from President Obama by Republican senators. States should not shy away from asking for more help from those most able to pay.

OK, so I hope you’ve got a good picture of the battle lines. Please note that The Times makes passing reference to “cutting spending” but the concept of reducing the size and reach of government is nowhere to be found in the discussion. And you can bet your last nickle that the talking points for this editorial came straight from the staff lounge at the DNC. There is no discussion of the hundreds of billions spent by the states every year because the federal government abrogates it’s responsibility on immigration law. Hopefully, thanks to men of courage like Representative Lamar Smith, that will begin to be addressed in the 112th Congress. There’s barely a peep from The Times – one line thank you – that collaboration between elected officials and unions is a major part of the problem, and even in that admission they can’t miss an opportunity to take a pot shot at Chris Christie. And the real crime in this editorial is the pap about windfall tax deals “extorted from President Obama”. Just who the hell does the New York Times think pays the taxes. Keep in the back of your mind that in addition to the following chart on personal income tax, the US has the highest corporate tax rate in the developed nations. According to the National Taxpayers Union, the tax distribution looks like this…

Personal Income Tax paid in 2008 by Adjusted Gross Income

% by AGI

AGI Threshold

% Tax Paid

Incremental Tax %

Top 1%

$380,154

38%

38%

Top 5%

$159,619

59%

21%

Top 10%

$113,799

70%

11%

Top 25%

$67,280

86%

16%

Top 50%

$33,048

97%

11%

Bottom 50%

less than $33,048

100%

3%

Percentages have been rounded.

OK, so the US currently has the highest corporate tax rates in the real world and when it comes to personal income tax, the the people who actually produce the most pay 70%+ of the taxes collected and half of the people who file pay essentially zip. And let’s not forget that Democrats are continually whining about a lack of progressiveness in our tax system. And that we don’t collect enough taxes. And nary a word is said from the left about spending too darn much money even though The Times even gets that part – see the blue quote above. And yes, it’s blue for a reason.

I do have some strategy for fixing this, but this particular diary isn’t the place to haul that out. This diary is simply to put us on notice that it’s finally Game ON!! We’ll see where it goes from here, but one thing I can guarantee you, there will be blood in the streets. Let’s hope it’s just political blood, but I wouldn’t be surprised by much of anything when push comes to shove. There is one thing that neither The Times nor the Democrats get, and that’s an important thing. At the local level when taxpayers are asked to pay more, they say “NO” about every time. Even, and especially in deep blue states.